Australia’s corporate regulator, the Australian Securities and Investments Commission (Asic), has said it will do all it can to reduce the regulatory burden on Australian financial services companies looking to export their services.
“We’ve long had a policy to do what we can to reduce those burdens and one way we can do so is by recognition, preferably on a mutual basis, of foreign regulatory requirements,” Asic senior executive leader investment managers and superannuation, Ged Fitzpatrick, told the Global Investor/ISF Master Class Australia in Sydney on July 9.
One initiative by the Australian government has been the development of the Asia Region Funds passport. The passport is in the consultation phase but government agencies in Australia, Korea, New Zealand, The Philippines, Singapore and Thailand are supportive.
“The passport will provide an opportunity to remove barriers to entry for foreign firms by changing asset management regulations to limit the extent to which different requirements in each economy in which a fund is offered have to be followed,” Fitzpatrick said.
But he also told delegates that Asic is focusing on a number of areas with regard to the increased regulatory burden on industry participants. For example, responsible entities also holding a Responsible Superannuation Entity licence will, from July 1 next year, be required to comply with requirements from both Asic and the Australian Prudential Regulation Authority, which regulates overseas financial institutions and super funds.
Asic’s concerns center on responsible entities understanding of “adequate risk”, which is not explicitly defined in the Corporations Act.
“On further investigation we found these smaller
The regulator issued a consultation paper on the risk management systems of responsible entities and has considered the responses it has received to that submission, but is awaiting the outcome of the current Financial System Inquiry before it issues regulatory guidance.
That inquiry, the first of this kind since 1997, has extensive terms of reference and will affect many in the industry in Australia. An interim report is expected shortly with a final report due by the end of this year.
Another area that is drawing Asic’s attention is the portfolio holdings disclosure regime that requires Australian pension funds to disclose more granular information about their fund’s holdings.
The disclosure of unlisted assets and hedge fund holdings, and the investments in those holdings, has been an area of concern for the industry, where disclosure could impact performance.